NZ-Australia
Will they merge one day?
Will isolated, economically declining NZ be forced one day
to merge with its neighbours? By Seah Chiang Nee
Aug 11, 2001
Australia
is one thousand miles away, but it more than New Zealand's
nearest trading partner. It shares a common culture, ethnic
features and social and political values.
There
is another similarity.
Faced
with a changing economy, both countries are being forced
to review the future relationship with each other and with
the outside world.
Both
countries are greatly affected by the new economy.
For
decades, Australia, the Lucky Country, lived a "laid-back"
lifestyle, its wealth in the country giving them a high
living standard that was watched with envy by all. Much
of this easy living has gone.
New
Zealand, too, has dropped some of its nonchalant, unambitious
But
whether it has fully embraced the global game is debatable.
Some
quarters are objecting to Singtel buying its giant telephone
company, Optus (US$7 billion).
The
Aussie government is also putting pressures on Wellington
to prevent SIA upping its 25 per cent stake in Air NZ in
support of a Qantas effort to take it over.
With
a market four times larger, Australia (22.3 million) wants
economic integration with Wellington to enlarge its opportunities
but the latter is reluctant. (see "Australia and New
Zealand: The Future of Knowledge Societies" )
New
Zealanders (3.8 million) are fearful it will lead Australia's
control of their country. Others, including the opposition
spokesperson Mr. Max Bradford, are worried they are drifting
apart. (read "New Zealand and Australia: Moving Together
or Drifting Apart?" )
New
Zealand, which has a freer economy than its larger neighbour,
faces two options.
One
is economic integration - and even a political union in
the longer term - with Australia and practice a sort of
integrated protectionism, keeping outsiders away.
The
other is to go after a bigger market by signing strategic
alliances and free trade pacts with the world's fast-growing
markets.
Apart
from USA and Europe, it could hitch up its wagon to East
Asia (China, Hong Kong, Taiwan, Japan and Korea) and Southeast
Asia.
Living
its same present life is a poor option. It is losing talent
fast.
Since
1985, it has one of the developed world's slowest growth
rates.
Once
ranked among the top three, it's now in 20th position and
may slide even further because of slow growth.
An economist
recently said New Zealand risked becoming the first country
in 50 years to lose its "developed" status unless
it changed its economic course.
Its
own Treasury in a report warned that, based on present trends,
New Zealand was likely to fall from 20th to 23rd out of
26 countries in the Organisation for Economic Cooperation
and Development (OECD) list of developed nations.
Annual
growth rate between 1970-99 was 0.76 per cent. "The
option of sinking gently in the world income hierarchy while
the population gets on with living full and non-materialistic
lives is not an option, especially because of network effects,"
said Professor Robert Wade, from the London School of Economics.
"Once
a threshold density of skilled people is lost, the rate
of out-migration is likely to accelerate, companies and
organisations will have increasing trouble meeting staffing
needs, the quality of public services will decline, the
tax base will erode, and so on.
"My
hypothesis is that it becomes very difficult for a country
to rejoin the 'organic core' once it has fallen out."
Will
economic integration - or even political merger - with Australia
help New Zealand out of its current malaise? I think by
itself it won't.
Seah Chiang Nee
Aug 11, 2001
